The race over New Jersey claim denial letters

If New Jersey health insurers don’t share how much time policyholders have for challenging claim denials, courts may give them much more time than the insurance company wants.

In 2010, Dr. Neville Mirza, in Secaucus, N.J., performed spinal surgery on a participant in a self-insured health plan administered by Insurance Administrators of America. Mirza’s request to be paid was denied when the health plan ruled the procedure to be “medically investigational.” The denial letter told Mirza he could challenge the decision but didn’t mention its one-year deadline to do that.

The good doc hired a lawyer but didn’t get a copy of the plan document showing the limitation until four months before the one-year deadline.

At trial, the plan administrators said Mirza’s patient knew about the one-year limit since she had access to the plan document from the beginning. Mirza’s attorneys also got a copy of the plan well in advance of the deadline, according to court documents. The district court agreed Mirza had been given ample notice and ruled in favour of the insurer.

The Third Circuit saw things differently, saying denial letters must include any applicable time limits. Its decision didn’t address whether a deadline for legal challenges must be disclosed if the plan doesn’t mention that issue.

The court was concerned that if insurers didn’t have to disclose challenge deadlines in denial letters, plan administrators could make it too hard for policyholders to go to trial “by burying the provision in lengthy plan documents, like the 91-page plan document in that case,” law firm Wilson Elser pointed out.

If an insurer doesn’t include the deadline to challenge a claim denial in the original denial letter, New Jersey policyholders will get six years to challenge—the statute of limitations applicable to breaches of contract.